Horngren's Financial & Managerial Accounting, The Financial Chapters Plus MyAccountingLab with Pearson eText -- Access Card Package (5th Edition)
Horngren's Financial & Managerial Accounting, The Financial Chapters Plus MyAccountingLab with Pearson eText -- Access Card Package (5th Edition)
5th Edition
ISBN: 9780134077321
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 1, Problem 1.27E

Using the accounting equation to analyze business transactions

Indicate the effects of the following business transactions on the accounting equation for Sam’s Snack Foods, a supplier of snack foods. Transaction (a) is answered as a guide.

  1. a. Sam’s Snack Foods received cash from issuance of common stock to stockholders.

    Answer: Increase asset (Cash); Increase equity (Common Stock)

  2. b. Cash purchase of land for a building site.
  3. c. Paid cash on accounts payable.
  4. d. Purchased equipment; signed a note payable.
  5. e. Performed service for a customer on account.
  6. f. Employees worked for the week but will be paid next Tuesday.
  7. g. Received cash from a customer on accounts receivable.
  8. h. Borrowed money from the bank.
  9. i. Cash dividends paid to stockholders.
  10. j. Incurred utilities expense on account.
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A number of business transaction carried out by smalling manufacturing company are as follows Borrowed money from a bank Sold land for cash at a price equal to its cost Paid a liability Purchases a computer on credit The owner invested cash in the business Purchase office equipment on cash Collected an account receivable Indicate the effects of each these transaction on the total amount of the company’s assets, liabilities and owner’s equity. Organize your answer in tabular form using the following column heading and the code letter I for increase D for decrease and NE for no effect the answer for transaction a is provided as an example   Transaction           Assets    =   liabilities    +   owner’s equity                                   I           =     I
A number of business transactions carried out by Green River Frame are shown below: The owner invested cash in the business. Purchased a computer on credit Purchased office equipment for cash. Purchased small office building for cash and credit both. Collected notes receivables. Sold land for cash at a price equal to its cost. Borrowed money from bank. Paid a lability. Received cash from computer store. Owner’s drawing. Instructions: Indicate the effects of each of these transactions upon the total amounts of the company’s assets, liabilities and owner’s equity. Organize your answer in tabular form using the column headings shown below and the code letters I for increase, D for decrease and NE for no effect.
For each transaction a through f, identify its impact on the accounting equation (select from 1 through 5 below). a. The company pays cash toward an account payable. b. The company purchases equipment on credit. c. The owner invests cash in the business. d. The owner withdraws cash from the business. e. The company purchases supplies for cash. f. The company provides services for cash. 1. Decreases an asset and decreases equity. 2. Increases an asset and increases a liability. 3. Decreases an asset and decreases a liability. 4. Increases an asset and decreases an asset. 5. Increases an asset and increases equity.

Chapter 1 Solutions

Horngren's Financial & Managerial Accounting, The Financial Chapters Plus MyAccountingLab with Pearson eText -- Access Card Package (5th Edition)

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